The Office of the US Trade Representative’s (USTR) has released its annual Special 301 Out-of-Cycle Review of Notorious Markets, in which it highlights the marketplaces that it claims facilitate substantial piracy and counterfeiting. After a four year absence, an Alibaba Group platform has re-appeared on the list – and its CEO subsequently sent a strongly-worded email to staff, seen by World Trademark Review, urging stakeholders to continue undeterred in the “all-out war against counterfeits”.

The Notorious Markets list highlights select online and physical marketplaces that reportedly engage in or facilitate substantial copyright piracy and trademark counterfeiting. While a majority of the websites on the 2016 list are added due to rampant copyright infringement (most often file-sharing or torrenting), there were a number included due to high levels of counterfeiting activity. Amongst these are Chinese B2B platform GongChang, Vietnamese e-commerce platform Muaban and China-based domain registration company Nanjing Imperiosus. The most significant write-up, however, was reserved for Taobao.

In last year’s report, the USTR voiced its concerns about Alibaba’s enforcement programmes but did not add any of its marketplace platforms to the list. But this year, following scathing submissions from trade associations, Taobao was formally re-added. In the report – where Taobao sat between two well-known torrent platforms – the USTR stated that “right holders in the United States and internationally continue to report serious challenges to reducing high levels of counterfeit and pirated goods”, adding that “longstanding obstacles to understanding and utilizing basic IP enforcement procedures continue unabated”. Specific issues mentioned in the report in regards to Taobao include inconsistent refusals of IP infringement reports, takedown request denials containing little to no justification or guidance, and error messages that stall or prevent use of the IP complaints systems.

Within hours of the report’s release yesterday, Alibaba Group sent out a statement from president Michael Evans. In it, he claims the decision to re-add Taobao “ignores the real work Alibaba has done to protect IP rights holders and assist law enforcement to bring counterfeiters to justice”, and that “the more than 100,000 brands that operate on Alibaba’s marketplaces cannot all be wrong – they are a clear demonstration of the trust that rights holders place in us”. In a more stinging criticism, he questioned “whether the USTR acted based on the actual facts or was influenced by the current political climate”.

Demonstrating how severely Taobao’s entry into the Notorious Markets list is being taken internally, Alibaba Group CEO Daniel Zhang sent out an email overnight to the company’s platform governance team (seen by World Trademark Review, and subsequently posted in full online). In addressing the USTR’s report, he opened by declaring: “This is a disappointing moment for all of us.” Across nearly 700 words, Zhang spoke defiantly (and often in a particularly combative tone) about what he described as the company’s “all-out war against counterfeits”.

“Our efforts and investments into anti-counterfeiting was never motivated by some list, and neither will it have any bearing on our continual fight against counterfeits moving forward,” he writes. “The fight against counterfeits is a fight against the dark side of human nature. Counterfeiters are like bacteria in the air that we breathe. Eradicating counterfeits require serious, long term commitment and cannot be achieved overnight. While others are focused on using technology to displace men, we are working on using technology to defeat counterfeiters. Our entire business is at stake in this. Today, our developers understand counterfeiters better than the counterfeiters understand themselves. Counterfeiters hate the police, but they fear Alibaba. That is the true measure of our success.”

Beyond just strong words, he referenced various anti-counterfeit developments in the past 18 months (including its ongoing partnership with Chinese law enforcement, the roll-out of its IP Joint-Force System and last week’s launch of the Cloud Sword Alliance) as evidence of the company’s commitment to tackle illicit goods. Furthermore, he laid out a series of questions that he states the company will focus on going forward. They are:

How can we improve and do even more?

What new innovations can we develop and implement?

How can we further optimize our technology?

How can we be more precise?

How can we act faster?

How can we ensure the counterfeiting industry hate and fear us even more?

Whether or not you believe that any Alibaba Group platforms deserve to be on the latest Notorious Markets list, such strong words against the scourge of counterfeits by a major company’s CEO are good to see – and gives hope that 2017 will be a standout year in the long-standing war on counterfeits. Follow up action will, of course, be all-important but the issue seems to be front of mind amongst the company's senior management.